FHA Inspector Roster
[Federal Register: October 10, 2002 (Volume 67, Number 197)]
[Proposed Rules]
[Page 63197-63200]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10oc02-12]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 200
[Docket No. FR-4720-P-01]
RIN 2502-AH76
FHA Inspector Roster
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
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SUMMARY: The purpose of this proposed rule is to establish the Federal
Housing Administration (FHA) Inspector Roster, and to provide
placement, recertification and removal procedures for Roster
applicants. The rule also identifies when a mortgagee must use an
inspector listed on the Roster.
DATES: Comment Due Date: December 9, 2002.
ADDRESSES: Interested persons are invited to submit comments regarding
this rule to the Rules Docket Clerk, Office of General Counsel, Room
10276, Department of Housing and Urban Development, 451 Seventh Street,
SW., Washington, DC 20410-0500. Communications should refer to the
above docket number and title. Facsimile (FAX) comments are not
acceptable. A copy of each communication submitted will be available
for public inspection and copying between 7:30 a.m. and 5:30 p.m.
weekdays at the above address.
FOR FURTHER INFORMATION CONTACT: Vance Morris, Director, Office of
Single Family Program Development, Room 9266, U.S. Department of
Housing and Urban Development, 451 Seventh Street, SW., Washington, DC
20410-8000; telephone (202) 708-2121 (this is not a toll-free number).
Persons with hearing or speech disabilities may access this number via
TTY by calling the toll-free Federal Information Relay Service at (800)
877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
FHA-approved mortgagees rely upon FHA compliance inspectors to
determine if the construction quality of a property is acceptable as
security for an insured loan. Before 1996, FHA's 81 field offices
maintained a panel of fee inspectors and they were assigned on a
rotating basis to perform inspections. Since 1996, mortgagees have
selected inspectors from a panel of inspectors listed on the Internet
at: https://entp.hud.gov/idapp/html/insplook.cfm?in_fha=No. 
Although there is still a panel of inspectors, it is a compilation of
the local panels established by the FHA's field offices.
This rule would establish the FHA Inspector Roster (also referred
to as the Roster) and provide eligibility requirements and procedures
and requirements for applicants to follow to be placed on the Roster.
In addition to demonstrating professional experience and familiarity
with HUD requirements, an applicant for the Roster would be required to
provide verification of passing HUD's comprehensive examination for
inspectors, after such an examination becomes available.
All inspectors currently listed on the Internet by HUD must be
recertified according to the new procedures and requirements to
continue to be eligible to inspect properties for FHA insurance.
Current inspectors will be permitted to conduct inspections for six
months after this rule becomes effective, but during that six-month
period they must apply and be approved for placement on the FHA Roster
to qualify as inspectors after that six-month period.
The rule also identifies when mortgagees must use Roster
inspectors. The FHA requires three inspections for new construction
when the local jurisdiction in which the property is located does not
perform inspections and has not issued both a building permit prior to
construction and a certificate of occupancy or equivalent document. If
an appraiser who is on FHA's Roster appraises the newly constructed
property after the two inspections are performed and the construction
is 100% completed, the final inspection by an inspector on the Roster
is not necessary. In the case of existing construction, Roster
inspectors must be used where structural repairs have been made
requiring an inspection and this inspection is not performed by a
licensed, bonded, registered engineer, a licensed home inspector, or
other person specifically registered or licensed to conduct such
inspections.
Finally, the rule also includes a procedure for removing an
inspector from the Roster for cause, generally for actions detrimental
to the FHA's interests.
II. Findings and Certifications
Paperwork Reduction Act
The information collection requirements contained in this rule have
been approved by the Office of Management and Budget (OMB) in
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter
35), and assigned OMB control number 2502-0548. An agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless the collection displays a valid
control number.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538)(UMRA) establishes requirements for Federal agencies to
assess the effects of their regulatory actions on State, local, and
tribal governments and the private sector. This proposed rule does not
impose any Federal mandates on any State, local, or tribal governments
or the private sector within the meaning of the UMRA.
Environmental Impact
This proposed rule does not direct, provide for assistance or loan
or mortgage insurance for, or otherwise govern or regulate, real
property acquisition, disposition, leasing, rehabilitation, alteration,
demolition, or new construction, or establish, revise or provide for
standards for construction or construction materials, manufactured
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this
proposed rule is categorically excluded from environmental review under
the National Environmental Policy Act of 1969 (42 U.S.C. 4321).
Impact on Small Entities
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed and approved this rule and in so doing
certifies that this rule would not have a significant economic impact
on a substantial number of small entities. The proposed rule would
establish uniform requirements and procedures for being placed on or
removed from HUD's new FHA Inspector Roster. In doing so, it does not
affect the amount of HUD-related business that will continue to be
available for inspectors. This rule would, however, replace the
existing system under which local HUD offices periodically select
inspectors competitively according to standards that vary from office
to office with nation-wide, uniform requirements that open the doors of
participation with HUD to all inspectors who qualify. The rule also
clearly defines the terms for continued participation with HUD, and
provides a uniform, expeditious and equitable procedure for removal
from the Roster. As such, the rule would result in an industry-wide and
governmental benefit in that it clarifies the terms of the relationship
between HUD and its fee inspectors. Notwithstanding HUD's determination
that this rule will not have a significant economic effect on a
substantial number
[[Page 63199]]
of small entities, HUD specifically invites comments regarding any less
burdensome alternatives to this rule that will meet HUD's objectives as
described in this preamble.
Federalism Impact
Executive Order 13132 (entitled ``Federalism'') prohibits, to the
extent practicable and permitted by law, an agency from promulgating a
regulation that has federalism implications and either imposes
substantial direct compliance costs on State and local governments and
is not required by statute, or preempts State law, unless the relevant
requirements of section 6 of the Executive Order are met. This rule
does not have federalism implications and does not impose substantial
direct compliance costs on State and local governments or preempt State
law within the meaning of the Executive Order.
Executive Order 12866, Regulatory Planning and Review
The Office of Management and Budget (OMB) reviewed this proposed
rule under Executive Order 12866 (entitled ``Regulatory Planning and
Review''). OMB determined that this proposed rule is a ``significant
regulatory action,'' as defined in section 3(f) of the Order (although
not economically significant, as provided in section 3(f)(1) of the
Order). Any changes made to the proposed rule subsequent to its
submission to OMB are identified in the docket file, which is available
for public inspection in the office of the Rules Docket Clerk, Office
of the General Counsel, Room 10276, Department of Housing and Urban
Development, 451 Seventh Street, SW., Washington, DC, 20410-0500.
List of Subjects in 24 CFR Part 200
Administrative practice and procedure, Claims, Equal employment
opportunity, Fair housing, Home improvement, Housing standards,
Incorporation by reference, Lead poisoning, Loan programs--housing and
community development, Minimum property standards, Mortgage insurance,
Organization and functions (Government agencies), Penalties, Reporting
and recordkeeping requirements, Social Security, Unemployment
compensation, Wages.
Accordingly, for the reasons discussed in this preamble, HUD
proposes to amend 24 CFR part 200 as follows:
PART 200--INTRODUCTION TO FHA PROGRAMS
1. The authority citation for 24 CFR part 200 continues to read as
follows:
Authority: 12 U.S.C. 1702-1715z-21; 42 U.S.C. 3535(d).
2. Add a subpart F, consisting of Sec. Sec. 200.170 through
200.172, under a new undesignated center heading reading ``FHA
Inspector Roster'' to read as follows:
Subpart F--Placement and Removal Procedures for Participation in
FHA Programs
FHA Inspector Roster
Sec.
200.170 Purpose of FHA Inspector Roster.
200.171 Placement on the Inspector Roster.
200.172 Removal from the Inspector Roster.
Sec. 200.170 Purpose of FHA Inspector Roster.
(a) General. HUD maintains the FHA Inspector Roster (Roster), a
list of the inspectors eligible to determine if the construction
quality of a property is acceptable as security for an FHA insured
loan.
(b) Mortgagee requirement. Only an inspector included on the Roster
may be selected by a lender to determine if the construction quality of
a property is acceptable as security for an FHA insured loan, as
follows:
(1) For new construction, the FHA requires three inspections by
Roster inspectors; and
(2) For existing construction, the FHA requires an inspection by a
Roster inspector where structural repairs have been made requiring an
inspection and this inspection is not performed by a licensed, bonded,
registered engineer, or a licensed home inspector, or other person
specifically registered or licensed to conduct such inspections.
(3) The requirements of paragraph (b)(1) of this section do not
apply if:
(i) The local jurisdiction where the newly constructed one- to
four-family property is located performs the inspection(s) and issues a
building permit prior to construction and a certificate of occupancy or
equivalent document; or
(ii) When the new construction is 100% complete, an appraiser who
is on FHA's Appraiser Roster appraises the property and two inspections
have already been performed by an FHA Roster inspector.
(c) Inspector requirement. To be eligible to conduct inspections as
required by paragraph (b) of this section, an inspector must be listed
on the Roster, except that any inspector already otherwise listed by
HUD as eligible to conduct inspections as of [effective date of final
rule for this section]
may conduct inspections until [date that is six
months after effective date of final rule for this section]
without
being listed on the Roster.
(d) Effect of placement on the Roster. Placement of an inspector on
the Roster only qualifies an inspector to be selected by a mortgagee to
determine if the construction quality of a property is acceptable as
security for an FHA insured loan. Placement on the Roster does not
guarantee that an inspector will be selected by any mortgagee. Use of
an inspector placed on the Roster also does not create or imply any
warranties or endorsements concerning the inspected property by HUD to
a prospective homebuyer or any other party.
Sec. 200.171 Placement on the Inspector Roster.
(a) Application. To be considered for placement on the Roster, an
inspector must apply to HUD using an application (or materials) in a
form prescribed by HUD.
(b) Eligibility. To be eligible for placement on the Roster, an
inspector must demonstrate the following to HUD:
(1) A minimum of three years experience in construction-related
fields;
(2) Possession of an inspector's State or local license or
certification if licensing or certification is required by the State or
local jurisdiction where the inspector will operate;
(3) That the applicant inspector certifies that he/she has read and
fully understands the inspection requirements, and any updates to those
requirements, of:
(i) HUD Handbook 4905.1 REV-1 (Requirements for Existing Housing,
One to Four Family Units);
(ii) HUD Handbook 4910.1 (Minimum Property Standards for Housing);
(iii) HUD Handbook 4145.1 REV-2 (Architectural Processing and
Inspections for Home Mortgage Insurance);
(iv) HUD Handbooks 4150.1 and 4150.2 (Valuation Analysis for Home
Mortgage Insurance);
(v) HUD Handbook 4930.3 (Permanent Foundations Guide for
Manufactured Housing);
(vi) The applicable local, State or Council of American Building
Officials (CABO) code; and
(viii) The HUD requirements at 24 CFR 200.926;
(4) Verification that the inspector has taken and passed HUD's
comprehensive examination for inspectors, after such
[[Page 63200]]
an examination becomes available. Inspectors who are included on the
Roster on [the effective date of the final rule]
have until [6 months
following the effective date]
to pass the comprehensive exam. Failure
to pass the examination by the deadline date constitutes cause for
removal under Sec. 200.172.
Sec. 200.172 Removal from the Inspector Roster.
(a) Cause for removal. HUD may remove an inspector from the Roster
for any cause that HUD determines to be detrimental to HUD or its
programs. Cause for removal includes, but is not limited to:
(1) Poor performance on a HUD quality control field review;
(2) Failure to comply with applicable regulations or other written
instructions or standards issued by HUD;
(3) Failure to comply with applicable civil rights requirements;
(4) Being debarred or suspended, or subject to a limited denial of
participation;
(5) Misrepresentation or fraudulent statements;
(6) Failure to retain standing as a State or local government
licensed or certified inspector, where such a license or certificate is
required;
(7) Failure to respond within a reasonable time to HUD inquiries or
requests for documentation; or
(8) Being listed on HUD's Credit Alert Interactive Voice Response
System (CAIVRS).
(b) Procedure for removal. An inspector that is debarred or
suspended, or subject to a limited denial of participation will be
automatically removed from the Roster. In all other cases, the
following procedure for removal will be followed:
(1) HUD will give the inspector written notice of the proposed
removal. The notice will state the reasons for, and the duration of,
the proposed removal.
(2) The inspector will have 20 days from the date of the notice (or
longer, if provided in the notice) to submit a written response
appealing the proposed removal and to request a conference. A request
for a conference must be in writing and must be submitted along with
the written response.
(3) A HUD official will review the appeal and send a response
either affirming, modifying, or canceling the removal. The HUD official
will not be someone who was involved in HUD's initial removal decision.
HUD will respond with a decision within 30 days of receiving the appeal
or, if the inspector has requested a conference, within 30 days after
the completion of the conference. HUD may extend the 30-day period by
providing written notice to the inspector.
(4) If the inspector does not submit a timely written response, the
removal will be effective 20 days after the date of HUD's initial
removal notice (or after a longer period provided in the notice). If a
written response is submitted, and the removal decision is affirmed or
modified, the removal will be effective on the date of HUD's notice
affirming or modifying the initial removal decision.
(c) Placement on the list after removal. An inspector that has been
removed from the Roster may apply for placement on the Roster (in
accordance with Sec. 200.171) after the period of the inspector's
removal from the Roster has expired. An application will be rejected if
the period for the consultant's removal from the list has not expired.
(d) Other action. Nothing in this section prohibits HUD from taking
such other action against an inspector, as provided in 24 CFR part 24,
or from seeking any other remedy against an inspector available to HUD
by statute or otherwise.
Dated: August 6, 2002.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 02-25730 Filed 10-9-02; 8:45 am]
BILLING CODE 4210-27-P
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